The Party's Over

One part of the order was unique: an attempt to eliminate Fortuna from the Internet -- or at least, the World Wide Web. It demanded that all Internet Service Providers that had customers with Fortuna promos remove those web pages and replace them with a stern FTC announcement, as well as a link back to the government site.

Their immediate task was to locate the address of the newly opened satellite office in Carson City, Nevada. An informant within Fortuna Alliance had disclosed that this office was being set up, but the FTC and law enforcement agencies hadn't been able to find its exact address. In Carson City a law enforcement team was standing by, waiting for a call from the task force in Bellingham to give them the address.

When the Carson City address was discovered and the Nevada team arrived at the satellite office, they found chaos and pandemonium among the fifteen Fortuna employees. "People were bouncing off the doors trying to get the money out," said court-appointed receiver Mike Grassmueck.

The Bellingham Fortuna Alliance offices were a scene of intense but deliberate activity following the seizure. FTC attorney Randall H. Brook looked calm and triumphant. "Everything we get will go to consumers," he pledged.

Also present was Bellingham Police Detective Al Jenson, who had pursued the local investigation for several months and had participated in the morning's seizure. Several sources inside Fortuna Alliance had reported since mid-April that it was widely believed by the Fortuna staff that "the detective was about ready to join up." Jenson seemed pleased with the results of the seizure.

Investigators, attorneys and the receiver's staff were rapidly going through records in a methodical way, looking for clues to where the funds were located. During the middle of the day, the offices had been held by a single FTC staffer while the rest of the team went to Whatcom State Bank to freeze the Fortuna Accounts and recover bank records.

In an interview two days after the seizure, Grassmueck stated that the size of the Carson City operation surprised investigators. "They were loading boxes into a blue station wagon when our people arrived," he said. The boxes were reportedly full of uncashed checks and money orders.

Apparently, the Carson City office had been operating for a short time, but was not yet fully operational. "There was a lot of new equipment down there," said Grassmueck. Much of the computer equipment was not fully wired in and set up. According to Grassmueck, it appeared possible that the Bellingham office was going to be closed and the operation shifted to Carson City.

"We actually found that Federal Express packages were being forwarded into Carson City," he said. "They were actually starting to process orders there."

In the weeks prior to the temporary restraining order and seizure, there had been discussions about transferring some of the Bellingham data processing staff to Carson City to make it fully operational. According to one source inside Fortuna, this had not happened because the Bellingham data processing was so far behind schedule that a programmer worked until 4 a.m. on the morning of the seizure.

In addition to the FTC action, on May 28, the state filed a cease and desist order against Fortuna Alliance, Augie, Libby and their employees and agents. Here it was revealed that Washington investigators discovered no proof of Delgado's claimed academic background, nor evidence of Fortuna having established a charity fund.

The reaction from Fortuna was swift. A press release was issued, calling the FTC raid "criminal." But the first important shot was fired in cyberspace, triggering a canonical "netwar" battle.

Word about Fortuna spread rapidly over the Internet. Flame wars between Fortuna supporters and critics broke out in Usenet newsgroups. Overseas web pages of Fortuna "members" quickly posted the news of the FTC action.

There was even a minor skirmish over control of the Fortuna Alliance's web pages, located on an independent Bellingham Internet site. Shortly after the FTC served the order requiring Fortuna's web page to be replaced by the court-ordered message to consumers, someone had electronically entered the system and restored the Fortuna home page. This was quickly discovered and the password on the system was altered.

The Fortuna "leaders" were no slouches either. Transcripts of conference calls between Delgado and others appeared on the Internet, via Fortuna web pages and USENET. Fortuna will fight back, Augie promised, and hinted darkly that the FTC raid was politically motivated because Fortuna gave away "tremendous" amounts of money to non-profits and worthy causes, and was "dedicated to empowering people." The raids were also motiviated because the agency needs to restore face after failing to successfully prosecute Microsoft, he said.

(Contrary to Delgado's claims, the FTC had nothing to do with the anti-trust actions against Microsoft -- the agency involved was the Department of Justice. Several other of Delgado's accusations of FTC involvement were also misattributions of actions by other federal agencies.)

But towards the end of one of these calls, Delgado conceded, "If I were there [in the U.S.] I'd be in jail, right now." Based on evidence revealed by the FTC, it's hard not to agree.

Law enforcement and regulators in Australia, Canada, Washington State and Florida are looking into these matters; Australian and Canadian authorities have stated that Fortuna's actions are illegal, but no legal action has yet been taken. In Washington and Florida, authorities have sought "Cease and Desist" orders to halt Fortuna's sale of memberships. None of these actions involve criminal charges, but are civil actions. Both of these, like the FTC's injunction, could involve criminal contempt charges, should Fortuna fail to meet the court-imposed instructions.

There may be more legal skirmishes, and the crucial battle will occur when the court has to decide whether to break up the company, pay off outstanding debts and return the funds to the members -- or to return the control of the company to Delgado and allow him to resume operations.

The granting of preliminary injunction and arrest warrants for criminal contempt argue strongly that permanent injunction will be granted. However, in the proceedings so far, Fortuna has not really mounted a real defense; the preliminary injunction was not really contested by Fortuna's attorneys.

The confusion which reigned at the Fortuna offices has intensified since the bust. The final chapter is still to be written in this story of dreams, money, confusion and deception. The court battles have only begun, and there are undoubtedly more surprises in store for everyone.

But it's unclear if any of the participants in the Fortuna Alliance subscribe to Christian Patriot ideas about the supremacy of the white Anglo-Saxon "race." Libby's apparent familiarity with the movement were shown by her pseudo-legal tactics in trying to save her property from foreclosure in 1992, and the later use of similar tactics in the Fortuna business strategy. Also, the two post-seizure conference calls by Augie and others were heavily laden with ideas about an apocalyptic battle with an evil conspiracy -- imagery familiar in the Christian Patriot movement in its war with the federal government.

And besides the $10,000 per month draw taken by both Libby and Augie, at least $5.5 million went to Antigua, where all trace of it disappears.

And what of the government's attempt to eliminate Fortuna from the 'net? All of the U.S.-based Fortuna web pages are shut down, but sites can still be found on computers overseas. And predictably, these pages call for viewers to send money.

One promises that Fortuna will resume business by June 11 (sorry). Another begs for contributions for the defense fund. "This will translate down to higher profitability to FORTUNA members once Fortuna is back on track!" Gushes the Australian owner of a web page. "All we need to do is see this thing through! Along those lines, we need to raise another $250,000 in attorney's fees for Fortuna by July 8, 1996."

And on still other web pages around the world Fortuna ads can still be found, only not so prominent. Fortuna Alliance is now tucked among other investment and multi-level marketing offers, all promising an easy road to riches. Don't be skeptical; for some people, these schemes work -- just look what Fortuna did for Augie Delgado.